Beyond the Waxman-Markey Vote: THE SIMPLE PATH TO CLIMATE PROTECTION

It's no secret how to save the world's climate: put a price on carbon - enough to drive a 2 or 3 percent annual emissions reduction. Use the revenues to cut taxes on things we want, like jobs, savings, and profits.

That's it. We're done. In a single stroke, we can cut carbon emissions over 20% by 2020, and 80% by around 2050 - just what scientists tell us we need. We get more jobs, higher salaries, bigger profits, cleaner technology, and sustainable growth. Nearly every economist, climate scientist, and expert from Al Gore to James Hansen to Tom Friedman to the Sierra Club agrees.

But, at least in theory, a "carbon tax shift" is not politically viable. Politicians are afraid to vote for it, because they believe voters - spun by ratings-hungry commentators - will oppose anything with the word "tax" in it.

That is why - absent the political will to choose the best policy - we judge every federal climate proposal against the gold standard: how close does it come to the effectiveness of a carbon tax shift?

Maybe it's time to question that wisdom. Waxman-Markey pass the House with a razor-thin victory on Friday - a harbinger of major compromises to come in the Senate; this suggests that cap-and-trade may be significantly less politically viable than the real thing - a carbon tax.

Consider:

• Contrary to media reports, cap-and-trade didn't pass the House on Friday - a $1 trillion package of concessions to the coal, ethynol, and other interest groups will. Cap-and-trade just happened to be along for the ride.

• Cap-and-trade itself attracts few if any votes in Congress. It's the money that attracts the votes. And a carbon tax shift would benefit more people with more money. Instead of the transaction costs of global cap-and-trade - which line the pockets of the discredited finance sector - we can cut payroll taxes for everyone, protect low-income Americans, transition coal workers, and even slice corporate income taxes. That is certainly a better option than buying off a few concentrated sectors by paying them to pollute.

• Voters support the carbon tax shift. Polls and focus groups show that - by stark comparison to other kinds of taxes - Republicans and Democrats like pollution taxes, especially if they are balanced with cuts on things we want, like income and payroll taxes.

• A carbon tax shift can pass with a stronger pro-climate coalition than a compromised cap-and-trade. By bringing together liberals, blue dog Democrats, the tech sector, tax cut supporters, and green-leaning Republicans, we can get the 60 votes needed to pass the Senate.

The coalition for cap-and-trade is a remarkable achievement. EDF, NRDC, Pew, Waxman, and Markey are to be congratulated for building an extraordinary coalition. Symbolically, today's vote is a breakthrough victory. Substantively, if implemented as written, it could delay real climate protection for more than a decade,

But now that we have passed a bill through the House, the game starts anew. Environmental groups aren't likely to sit quietly any longer, when they realize that a perceived political victory is no substitute for actually cutting carbon emissions. It's the Senate's turn, and after that, a conference committee.

There is good policy in Waxman-Markey - most of Titles 1 and 2 for example. But cap-and-trade, sad to say, has been too deeply compromised. It invites massive fraud, turns back EPA's hard-won carbon regulatory powers, and imposes a porous cap that could lead to higher costs AND more emissions AND greater market volatility.

It looks like it is time, finally, to put build a coalition behind a proposal that meets the gold standard of climate policy: : a carbon tax shift that will, once and for all, end our addiction to coal and shift us toward an economy that can sustain us for the century to come.

Follow Bill Shireman on Twitter: www.twitter.com/billshire

Comments

[ceolas]

Bill,
"But cap-and-trade, sad to say, has been too deeply compromised."

Understanding Cap and Trade, and why it is bad for America and bad for emission reduction
http://ceolas.net/#cce5x
Market Reduction of CO2: Cap and Trade - or Not?
Basic Idea -- Offsets -- Tree Planting -- Manufacture Shift -- Fair Trade -- Surreal Market -- Real Market -- Allowances: Auctions + Hand-Outs -- Allowance Trading -- Companies: Business Stability + Cost --In Conclusion

[SallyVCrockett]

Bravo and Amen. While I agree with House leadership that something needs to be done soon to stem the tide of global climate change, refusing to consider the alternatives to a flawed cap and trade scheme is short-sighted or worse. Waxman-Markey is a watered-down, toothless bill that will do little to mitigate the problem it is trying to address. Moreover, the last thing this country needs is another complicated and convoluted subprime carbon market created by a cap and trade system. A revenue-neutral carbon tax is straightforward and transparent, incentivizes green R&D and returns the revenue to the people. It's a win for the environment and a win for the economy.